Monday, August 21, 2017
Skip Navigation LinksGroup Tax Free Savings Accounts (TFSA)
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The Tax-Free Savings Account was introduced in the 2008 Federal Budget as a new tax-saving measure. 

A Group TFSA will be a valuable addition to any Group Benefits or Retirement Savings plan. 

As the funds invested in this program grow tax-free, capital gains on investments under this plan are not taxable, providing a valuable opportunity for individuals to save for that new car, home, or provide addition funds for their retirement.  A general overview of the Tax-Free Savings Account is provided below.

Eligibility and Contributions:

  • Effective January 1, 2009, TFSAs will be available to all Canadian Residents over the age of 18.
  • Maximum contribution is $5000 per year regardless of individual income.
  • The $5000 contribution limit is in addition to the RRSP maximums.
  • Contributions are not tax-deductible.
  • TFSA contribution limit will be indexed to inflation, rounded to the nearest $500.
  • Contribution room determined by the CRA.
  • Group and individual TFSAs will be available.
  • Group TFSAs offer the convenience of automatic payroll deduction as well as lump-sum payments.

Member Benefits:

  • Investment earnings and withdrawals are tax-free (including Capital Gains Tax). 
  • Withdrawals available at any time for any purpose.
  • Amounts withdrawn are added to an individual’s contribution room for the following year
  • Unused contribution room may be carried forward indefinitely.
  • Investment options will be similar to an RRSP.  Exceptions exist for non-arm’s length entities.
  • Income splitting is allowed for contributions.
  • TFSA assets can be used as collateral for loan agreements.

Retirement Benefits:

  • May be used to form part of an individual’s retirement strategy.
  • TFSAs do not mature at age 71; therefore, there is no need to convert into a retirement income product.
  • Income earned within a TFSA and withdrawals do not affect eligibility for federal income-tested benefits and credits.
  • TFSAs will provide a tax-effective account for excess contributions to capital accumulation plans.
  • Reporting will be done in a similar fashion to existing group retirement plans.
  • In the event of the death of the account holder:
    • Earnings prior to death are not taxable.
    • If a spouse is named as the successor account holder, TFSA earnings accrued after death are not taxable.
    • If no successor has been named, earnings accrued after death will be then become taxable.

Inquries and Further Information

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